Headline inflation just cooled to 2.2%, which usually signals that rate cuts are on the horizon. But if you look past the headlines, the data is flashing warning signs that every Toronto homeowner and investor needs to see.

We are entering a period of what I call “Defensive Stability.” The easy wins are behind us, and the risks are hiding in the fine print.

Here is your Mortgage Minute analysis for the week.

1. The Scotiabank Shock: Are Rate Hikes Coming Back? 

While most economists and banks are betting on a rate hold or further cuts through 2026, Scotiabank has issued a bold, contrarian forecast.

They believe the Bank of Canada’s easing cycle is effectively over. Even more concerning, they predict the Bank’s next major move in the second half of 2026 could actually be a rate hike.

Why? Scotiabank points to “sticky” core inflation and Canada’s weak productivity as persistent threats. If they are right, the strategy of “riding the variable rate down” just became much riskier.

2. The Condo Crisis Hits a Breaking Point

For months, we’ve talked about “cracks” in the Toronto condo market. Now, those cracks are turning into fractures.

• Delinquencies Spiking: While national mortgage delinquencies remain low (0.22%), Toronto’s delinquency rate spiked 60% year-over-year. The high-rate environment is finally forcing households to make hard choices.
• Pre-Con Cancellations: The stress isn’t just on homeowners. Major projects like One Bloor West have seen purchase agreements cancelled as the pre-construction market buckles under the weight of high costs and lower valuations. 
• Investor Reality: Many investors are now choosing to walk away from deposits rather than close on units that no longer make financial sense (“dog crate” condos that are cash-flow negative). 

3. The Hidden Supply Crisis

While buyers sit on the sidelines waiting for clarity, builders are pulling back.

National housing starts tumbled 17% in October, with massive drops in Ontario and BC. 
The Bottom Line: We are under-building during a pause. When demand eventually returns—driven by pent-up buyers or future immigration—it will collide with this new supply gap. This is the classic recipe for the next price spike.

The “So What?” for You

If you are waiting for the “perfect bottom” where rates are low and prices are cheap, you might be waiting for a market that will never exist.

• If you are renewing: Do not assume rates will be 2% lower in two years. Defensive term selection is critical right now.
• If you are buying: The barrier to entry is higher than ever (the average Toronto first-time buyer is now 40 years old ), but the lack of competition right now is your only advantage.